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system saves about 4 hours as an average for ships which arrive too late for complete transit. Profit. of $10,000,000 a Year Like other well conducted enter- prises doing a big business, the canal has made a distinct profit in the past few years. The investment in the canal and its adjuncts is partly for national de- fense and partly commercial. Invest- ment charged arbitrarily to na- tional defense at the beginning of the fiscal year 1927 (stated in round figures) was $113,000,000 and that to commercial use $275,000,000. ‘The latter figure may be considered the capital invested in the canal in a commercial sense. Annual interest at 8 per cent (which is the rate on most of the bonds issued to cover canal construction) would be $8,250,- 000. The following figures of canal expenses do not include this interest charge but do include a fixed annual charge of $350,000 for amortization of canal fixed property having a life of 100 years and $625,000 covering de- preciation at two per cent per annum on property having a life of less than 100 years, which together with inter- est at 3 per cent per year will pro- vide for amortization of the invest- ment or replacement of all items at the end of 100 years. In addition, the expenses include a further charge of approximately $600,000 per year for depreciation of canal equipment. The author, Seymour Paul, is chief of the bureau of statistics of the Panama canal. The photographs used for illustrations were made by E. Hallen, official photographer of the Canal. This article was prepared for MARINE REVIEW at the request of thé editor. Revenues and Expenses Panama Canal-1927 Canal Transit Revenues: AOL B cic ivescsveavssosnecslieuauais antoerehinn $26,219,535.23 Taxes, licenses, TITLOA) Sscscassecsusvavercccst 72,121.08 Postal receipts 145,830.83 Interest on bank balance.... 10,000.00 Sales of government prop- OLEYPidias aisctossceteerncaconineneaeeee 167,970.28 Miscellaneous iii icccccelicciecsoces 196.17 Total canal transit reve- TUBS 2S. cisct seavessectorasanteseesontece *$26,615,643.54 Canal transit expenses........ $11,152,999.99 Depreciation — amortization fixed property ......c.cccseeeee 980,335.78 Gross canal transit ex- DONSESiA iss ivivanccchosassevahuncestene $12,133,335.77 Canal transit earnings........ **3 257,497.58 | Net canal transit ex- POENSOSY ciyccshiiicctsces uashacttese $ 8,875,838.19 Canal transit revenues........ $26,615,653.54 Net canal transit expenses 8,875,838.19 Net canal transit revenues $17,739,815.35 Fixed capital charge............ $ 7,3818,024.34 Surplus: inciccisatacesens $10,421,791.01 Canal business revenues...... $16,453,411.80 Canal business expenses .... 15,645,666.44 Net business revenues...... $ 807,745.36 Fixed capital charge ........ 765,971.13 Sarplyas. ince ees $ 41,774.23 Panama canal revenues ($26,615,653.54 + 16,453,- AULIBO)F yor tensscsvcebecenc asveackshiccess $43,069,065.34 Panama canal expenses ($8,875,838.19 + 15,645,- GOGiA 4) 2s aeons wares tesceovenesseen ***24 521,504.63 panUcasgureeeseeeas $18,547,560.71 8,083,995.47 Snrplusic cuca ceo: $10,463,565.24 *Covered into United States treasury as miscellaneous receipts. **Repaid to canal appropriations. ***The amount of salaries and wages included in this figure is $11,681,220; the balance of $12,840,284.68 is other ex- penses. Revenues were less than the actual expenses of operation during the first four years after the opening of the canal, Aug. 15, 1914. This was due largely to slides in Gaillard cut. In the later years revenues have exceeded the cost of operation and maintenance. To, June 30, 1927, the operating expenses for the canal proper amounted to approximately $95,000,000, and the revenues to over $168,500,000, of which $166,075,423.60 was for tolls alone. In addition, the operating expenses of certain auxil- iary business units amounted to over $143,000,000 more, against business revenues of over $149,000,000. The excess of total earnings over total expenses at the beginning of the present fiscal year, July 1, 1927, stood at $79,953,875.538. However, as stated above, this figure does not include the $8,250,000 annual interest on the com- mercial investment, which must be taken into consideration in comparing the canal with a commercial enter- prise. For the 18-year period at simple interest this charge would amount to $107,250,000, and applying the $80,000,000 operating surplus against this charge would still leave a deficit of over $27,000,000. At com- pound interest the deficit would be considerably more. Earnings Show Large Increase However, the total earnings of the Panama canal during the fiscal year closed June 30, 1927, were $40,487,- 463.39, of which tolls amounted to $24,217,185.382. The corresponding ex- pense of operation and maintenance, including depreciation, but exclusive of interest on the commercial capitali- zation, was $23,999,832.79, leaving net revenues $16,487,630.60, which is about twice the annual interest figure and leaves a surplus of approximately Administration Building of the Panama Canal, the Town of Balboa, Balboa Shops and the Inner Harbor MARINE REVIEw—April, 1928 it),